When executive chairman John McFarlane warns Aviva's shareholders to prepare to see the US life insurance and annuities business depart soon at a "substantial discount" he undoubtedly means it. The book value is £3.2bn but analysts think the operation won't fetch much more than £1bn.

Nor do those bald numbers tell the whole painful story. Long-standing Aviva investors will recall that the group's misadventure in the US was partly funded by raising £900m of equity in 2006 to fund the acquisition of AmerUS for £1.6bn. The share price then was 700p; today it is 333p. Ouch.

Aviva's disaster in the US has, though, been obvious for years. Two factors prevented Andrew Moss, ousted in the spring as chief executive, from sanctioning a retreat. The official explanation was that the best time to contemplate a sale was when self-help measures had been taken. The unofficial reason was that, as finance director in 2006, he was part of the team that made the original strategic blunder.

New-boy executive chairman John McFarlane carries no historical baggage. But nor does he think there is any point in fiddling around with restructuring plans in the US and waiting for the climate to improve. He deems it better to take the hit on the chin and deploy the diminished pile of capital elsewhere.

That judgment seems correct. Aviva faces so many other challenges – finding £400m of cost-savings is just one of McFarlane's nine "transformation" programmes – that the US embarrassment is best ended quickly. But the "substantial discount" warning serves as a reminder that the plan to revitalise Aviva starts with a step backwards in the form of a heavy loss.

That explains why, as a recovery story, Aviva is not generating much excitement in the market. McFarlane is doing the right things but the new chief executive, when he or she is finally appointed, still faces a long hard slog.